PREQUALIFICATION bids have been called by October 15 for the combined concession to operate and maintain the Kenyan and Ugandan rail networks.

A memorandum of understanding was signed by the two countries at the end of July, and Canarail and International Finance Corp have been appointed as transaction advisers. Kenya’s Transport Minister John Michuki said that the joint privatisation committee expects to receive best and final offers in April 2005, so that the 25-year concession can start in July.

The minister said Kenya Railways Corp would be split into three business units: Kenya Railway Company, Kenya Railways Management Authority and the Kenya Railways Safety Authority. The winning bidder is expected to take a 60% stake in the new operating company, with the other 40% shared between local institutions and private individuals.

The concession will cover 1924 km of the KRC network, excluding the 150 km Konza - Magadi line currently leased to the Magadi Soda Co. It will also include the Malaba - Kampala line in Uganda and the branches to Port Bell and Soroti, totalling 551 km, plus the Lake Victoria train ferries.

IFC has recommended that KRC staffing should be reduced to 6200, which will require a reduction of 2000 employees at an estimated cost of KSh3·1bn.